Item - 2021.PH28.2

The Planning and Housing Committee recommends that:  

Land Considerations

1. City Council direct the Deputy City Manager, Corporate Services and the Executive Director, Corporate Real Estate Management to review, on an expedited basis, the four sites identified in Attachment 1 (the "Phase Three Sites") to the report (October 14, 2021) from the Executive Director, Housing Secretariat, including any prior terms of transfer that have been approved by City Council, and authorize the Deputy City Manager, Corporate Services and the Executive Director, Corporate Real Estate Management to determine, in consultation with the City Manager, whether such terms should be amended in order to achieve the objectives of the Housing Now Initiative.

2. City Council authorize the Deputy City Manager, Corporate Services, where it is determined such action is appropriate to achieve the objectives of the Housing Now Initiative, to declare all or portions of each of the Phase Three Sites surplus, and to amend any prior declaration(s) of surplus, subject to the retention of those areas and interests as have been determined critical to the operational requirements of a division or agency.

3. City Council amend the existing delegated approvals and signing authorities in Item 2017.EX27.12, City-Wide Real Estate - Delegated Authorities Framework and Transition Plan, adopted by City Council on October 2, 3 and 4, 2017, to authorize the Deputy City Manager, Corporate Services and the Chief Financial Officer and Treasurer to approve any lease, transfer and other property transactions involving these Phase Three Sites for the purpose of achieving the City's affordable housing objectives notwithstanding that the related compensation may exceed $5 Million Dollars, and City Council authorize the Deputy City Manager, Corporate Services and the Chief Financial Officer and Treasurer to treat the estimated value of the rental savings that will be realized by tenants of the affordable housing units as compensation received by the City when assessing whether a proposed transaction reflects market value, provided that the Executive Director, Housing Secretariat and the Board of CreateTO or the Board of Directors of the related CreateTO corporate entity concur with the proposed transaction terms.

4. City Council waive the restrictions of Section 2.4(a) of the shareholder direction of Build Toronto Inc., controlled by the Board of CreateTO, solely for transactions relating to the Phase Three Sites on terms and conditions satisfactory to the City Manager and in a form approved by the City Solicitor, and allow for donations or similar contributions to any charity or charitable organization, or to a non-profit organization for the purpose of facilitating the provision of affordable housing units at the Phase Three Sites where determined appropriate by the CreateTO Board of Directors, in consultation with the Deputy City Manager, Corporate Services and the Executive Director, Housing Secretariat.

5. City Council authorize the Deputy City Manager, Corporate Services to approve the transfer of title to any of the Phase Three Sites, or a portion thereof to corporate entities controlled by the Board of CreateTO at nominal consideration where permitted by law, and where the Deputy City Manager, Corporate Services, the Executive Director, Housing Secretariat and the Chief Executive Officer, CreateTO have agreed upon the terms of transfer that will be reflected in a Transfer Agreement between the City and the corporate entity controlled by the CreateTO Board.

6. Council direct the Board of Directors of Toronto Community Housing Corporation, when requested by the Deputy City Manager, Corporate Services and the Executive Director, Corporate Real Estate Management, to transfer a portion of lands located at 1080 Eastern Avenue and currently owned by Toronto Community Housing Corporation, to the City of Toronto at nominal cost to be included as part of the Housing Now site at 1631 Queen Street East, which it will thereafter form part of.

Planning Process

7. City Council request the Chief Planner and Executive Director, City Planning to:

a. provide key planning principles and guidelines for each of the Phase Three Sites to be included as part of the public market offering process; and

b. expeditiously advance Official Plan Amendments, Zoning By-law Amendments and plans of subdivision required to prepare the properties for marketing and ensure a range of housing opportunities within each of the Phase Three Sites;

8. City Council request the Chief Operating Officer, Development, to support the Housing Now Initiative through the Concept 2 Keys (C2K) program by continuing to expedite the review process for Site Plan Control applications submitted by the selected developers of each site.

Affordable Housing Program

9. City Council approve an overall development target across the Phase Three Sites including a minimum of one-third affordable rental units (with average rents not to exceed 80 percent of annual Canada Mortgage and Housing Corporation average market rent, a minimum of one-third market rental housing, and a maximum of one-third ownership homes.

10. City Council request the Executive Director, Housing Secretariat, in consultation with the Chief Executive Officer, CreateTO, to explore opportunities and partnerships with other orders of governments and non-profit organizations to exceed the one-third affordable rental housing target on each of the Phase Three Sites.

11. City Council exempt the up to 600 affordable rental homes anticipated to be developed throughout the Phase Three Sites, commencing from first occupancy of each site, from taxation for municipal and school purposes for the term of the municipal housing project facility agreement, with the property tax exemption having an estimated net present value of approximately $19,736,198 over 99 years.

12. City Council exempt the 485 additional affordable rental homes (in addition to the 4,520 affordable homes already approved) anticipated to be developed on the Phases One and Two Sites from taxation for municipal and school purposes for the term of the municipal housing project facility agreement, with the property tax exemption having an estimated net present value of approximately $15,953,427 over 99 years.

13. City Council authorize the Controller to cancel or refund any taxes paid for the affordable rental homes developed on Phase One, Two and Three Sites, after the effective date of the exemption for taxation for municipal and school purposes set out in the applicable municipal housing project facility agreement.

14. City Council authorize the Executive Director, Housing Secretariat to offer the Open Door incentives for affordable rental housing, for up to 600 affordable rental homes, for the term of affordability, and to exempt the affordable rental housing, including any applicable ancillary and related amenity space on the Phase Three Sites, from the payment of development charges and provide a waiver of all planning and building permit fees and parkland dedication fees.

15. City Council authorize the Executive Director, Housing Secretariat to offer the Open Door incentives for affordable rental housing, for 485 additional affordable rental homes (in addition to the 4,520 affordable homes already approved) anticipated to be developed on the Phases One and Two Sites for the term of affordability, and to exempt the affordable rental housing, including any applicable ancillary and related amenity space, from the payment of development charges and provide a waiver of all planning and building permit fees and parkland dedication fees.

16. City Council authorize the Executive Director, Housing Secretariat to negotiate and enter into, on behalf of the City, municipal housing project facility agreements (the City's Contribution Agreement) with the developers chosen for each of the Phase Three Sites, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form approved by the City Solicitor.

17. City Council authorize the Executive Director, Housing Secretariat or her designate to execute, on behalf of the City, any security or financing documents required by the developers of the Phase Three Sites to secure construction and conventional financing and subsequent refinancing, including any postponement, confirmation of status, discharge or consent documents where and when required during the term of the municipal housing project facility agreement, as required by normal business practices, and provided that such documents do not give rise to financial obligations on the part of the City that have not been previously approved by City Council.

18. City Council authorize the Deputy City Manager, Corporate Services, in consultation with the Deputy City Manager, Community and Social Services, to provide any consent necessary to transfer or encumber the Phase Three Sites or the affordable rental housing portion thereof, and to negotiate and enter into any agreements or other documents required to effect any future transfer or assignment of any of the Phase Three Sites or the affordable rental housing portion thereof, and the associated legal agreements with the City to another legal entity, on terms and conditions satisfactory to them and in a form approved by the City Solicitor.

Funding and Budget Considerations

19. City Council direct the Deputy City Manager, Community and Social Services and the Executive Director, Housing Secretariat to compensate CreateTO for the costs related to the provision by CreateTO of services directly related to implementing the Housing Now Initiative including: preparing the properties for marketing including undertaking necessary environmental studies and remediation; market analyses; planning and other consultant studies; legal costs; overhead and administration costs; relocation costs; costs of on-site City programming requirements; costs of required on- or off-site infrastructure upgrades or improvements; subsidizing projects that many not be financially feasible, etc., with payment to be made on a cost-recovery basis from the Capital Revolving Reserve Fund for Affordable Housing (XR1058).

20. City Council direct the Executive Director, Housing Secretariat, in consultation with the Chief Executive Officer, CreateTO, to include the estimated cost of delivering the Housing Now Initiative as part of the Housing Secretariat's 10-Year Capital Plan for consideration by Council as part of the 2022 budget process.

21. City Council direct the Executive Director, Housing Secretariat, in consultation with the Chief Executive Officer, CreateTO, to request funding to complete due diligence/feasibility work related to the five sites identified as potential future Housing Now Initiative sites in Attachment 2 to the report (October 14, 2021) from the Executive Director, Housing Secretariat, as part of the Housing Secretariat's 10-Year Capital Plan for consideration by Council as part of the 2022 budget process.

Market Offering Process

22. City Council direct the utilization of the Phase Three Sites, identified in Attachment 1 to the report (October 14, 2021) from the Executive Director, Housing Secretariat, for the Housing Now Initiative through a market offering process with a priority of retaining public ownership through long-term land leases.

23. City Council direct the Deputy City Manager, Corporate Services, the Deputy City Manager, Community and Social Services, and the Chief Financial Officer and Treasurer to approve the business case and market offering process for each Phase Three Site provided that the Executive Director, Housing Secretariat and the CreateTO Board of Directors or the Board of Directors of the relevant CreateTO corporate entity, concur with the proposed business case and market offering process.

24. City Council direct the Chief Executive Officer, CreateTO, in consultation with the Executive Director, Housing Secretariat to administer the market offering process for the Phase Three Sites and utilize its existing pre-qualified Broker roster to expedite marketing, where required, and to negotiate the leases, purchase agreements and other contracts with the successful development partners, other than the municipal housing project facility agreements in Recommendation 16 above, and subject to the approvals required in Recommendation 23 above.

25. City Council direct the Executive Director, Housing Secretariat, in consultation with the Chief Executive Officer, CreateTO, to administer the market offering process for sites designated exclusively for non-profit and Indigenous participation, and to negotiate the leases, purchase agreements and other contracts with the successful non-profit and Indigenous development proponents.

26. City Council request the Executive Director, Housing Secretariat to work with the Chief Executive Officer, CreateTO, the Deputy City Manager, Corporate Services, and the Chief Financial Officer and Treasurer in overseeing the market offering process related to the Phase Three Sites including the selection of preferred proponents, and the co-ordination of government funding and financing incentives to ensure that the affordable housing projects are financially viable.

27. Council request the Executive Director, Housing Secretariat and the Chief Executive Officer, CreateTO to encourage the involvement and participation of non-profit, co-operative and Indigenous housing organizations in the market offering process for the Phase Three Sites, and to provide greater consideration to submissions that exceed the affordable rental and market rental housing delivery targets and increase supportive housing opportunities.

28. City Council request the Executive Director, Housing Secretariat and the Chief Executive Officer, CreateTO, in consultation with the Executive Director, Social Development, Finance and Administration, to incorporate, in the market offering process for all Housing Now sites, including the Phase Three Sites, measurable community benefits opportunities, such as social procurement and apprenticeship, training, and/or other hiring opportunities for people from equity-deserving communities.

29. City Council request the Executive Director, Housing Secretariat in consultation with the Chief Executive Officer, CreateTO, to ensure that all future Housing Now Initiative sites, including the proposed Phase Three sites, achieve the Toronto Green Standard Version 4 Tier 2 energy performance level with the exception of sites that are currently in, or have completed the market offering process including: 50 Wilson Heights Boulevard; 705 Warden Avenue; 777 Victoria Park Avenue; 140 Merton Street; 2444 Eglinton Avenue East; and Bloor-Kipling (Block One).

Other Considerations

30.  City Council re-iterate its request that the Federal Government and the Canada Mortgage and Housing Corporation (CMHC):

a. approve a portfolio approach to the funding and financing of all sites in the Housing Now Initiative including the new Phase Three Sites;

b. develop a streamlined and expedited approach to underwriting Housing Now Initiative sites, including through the Rental Construction Financing Initiative;

c. allocate grant funding for eligible Housing Now projects based on the growing need to increase the supply of permanent affordable housing options for residents, and reflective of the high cost of construction in Toronto; and,

d. identify and dedicate surplus lands in Toronto for increasing the supply of affordable and supportive housing.

31.  City Council re-iterate its request to the Province of Ontario to support the creation of affordable and supportive housing opportunities as part of the Housing Now Initiative by providing operating funding (for both rent supplements to deepen affordability and to provide support services), and to identify and dedicate surplus lands within Toronto for new affordable homes, including supportive housing.

The Housing Now Initiative was approved by City Council in January 2019 to activate City-owned lands to stimulate the development of affordable rental housing within transit-oriented, mixed-income, mixed-use, complete communities. This signature program is a key component of the City's HousingTO 2020-2030 Action Plan and is central to enabling the City to meet its target of approving 40,000 new affordable rental homes, including 18,000 supportive homes, by 2030. Of the overall 40,000 new affordable rental homes, the City has committed to delivering 10,000 using its own land and financial incentives.

In 2019, as part of phase one of the Housing Now Initiative, 11 properties were approved by City Council to create an estimated 10,000 new homes, including 3,700 affordable rental homes ("Phase One"). In May, 2020, City Council approved six additional sites to be added to the initiative as part of phase two, with the potential to create up to 1,700 additional homes, including up to 620 affordable rental homes ("Phase Two").

The total 17 sites across Phases One and Two are currently in various stages of development. Seven sites have progressed through the re-zoning process, three of which have development partners selected with construction estimated to begin by early-to-mid-2022. Additionally, through the planning approval process, the original residential unit targets were exceeded and the program is now on track to create an estimated 13,479 new homes, including 3,037 ownership homes and 10,142 purpose-built rental homes, of which 5,005 will be affordable. The new affordable rental homes to be created under this program will provide much-needed affordable housing options to address a wide range of housing needs and incomes.

This report provides Council with an update on the Housing Now Initiative including progress to-date on advancing the 17 sites. It also recommends Council approval to expand the program to add four additional sites as part of the third phase of the program ("Phase Three"). The Phase Three sites (outlined in Attachment 1) are estimated to yield between 1,150 and 1,400 new homes, including between 450 and 600 affordable rental homes. To support delivery of the Phase Three sites plus the additional units achieved in Phases One and Two, this report also recommends Council's approval of an estimated $90.61 million in Open Door Program incentives.

In addition to the Phase Three sites, this report recommends Council approval to create a pipeline of five sites which, subject to satisfactory feasibility assessments, can be added to future phases of the Housing Now Initiative. The creation of a pipeline of sites will enable staff to undertake early due diligence work, including identify risks and mitigation strategies, to ensure that sites can more rapidly move through planning approval and development stages. Creating a pipeline of sites will also enable the City to take advantage of any future federal and provincial funding opportunities, should they become available, to support the development of new housing.

The Housing Now Initiative is an example of Toronto's leadership approach to city-building and its commitment to increasing the supply of new homes for current and future residents. Across the growing portfolio of City-owned sites, a significant number of affordable rental, market rental and ownership homes will be developed within complete communities. To-date, the City has dedicated over $1.3 billion in land value, financial incentives, and staffing resources to expedite the planning approvals and development processes. These investments have made it possible for the City to achieve over 50% of its ten-year 10,000 affordable homes approval target in less than three years. However, support from the federal and provincial governments through increased investments and new policy tools is critical to delivering the Housing Now Initiative and the City's overall HousingTO 2020-2030 Action Plan. Participation and investments from the non-profit and private sectors are also essential for success.

Increased investments in affordable and supportive housing will support the objectives of all orders of governments to provide a range of housing to address the needs of current and future residents, plus create livable communities where stable, secure and high quality homes provide people with the opportunity to thrive. Investments in housing also support the social, economic and environmental health and resilience of communities, cities and our country as a whole.

The Housing Now Initiative is being implemented as a major corporate initiative and this report was developed with input and support from staff in the Housing Secretariat, City Manager's Office, City Planning, CreateTO, Corporate Real Estate Management, Legal Services, Financial Planning, Corporate Finance, Shelter, Support and Housing Administration and Concept 2 Keys.